In my view the Minutes from the September FOMC meeting did not break any new ground.  They signaled policy makers will probably soon lift interest rates as the economy is slowly but steadily improving.  The odds for a December increase remained unchanged around 67%.  Market were relatively quiet and unchanged.

There are many bulge bracket firms forecasting a significant decline in the S & P predicated upon the imbalances of today’s cross correlated technology based trading amplified by the proliferation of ETFs, ETFs that few understand.

I write cynically do most recognize that ETFs are only a collection of derivatives and futures not individual stocks which are the composition of mutual and closed ended funds?   Moreover most do not have any idea about the leverage employed.

Several times I have opined today’s ETFs are about as opaque and as dangerous as yesterday’s CDOs and CMOs.  I hope I am wrong in this view.

At this juncture the markets have been complacent about the election. Is this about to change, a huge comment based upon the consensus view that Trump has all but lost.  Twenty six days is a long time and I think Clinton’s support is not as deep or as great as the pundits suggest.

Moreover according to IBD, 80% of election stories are obstinacy negative about Trump.

As an educated white guy, I am nervous to write that I am voting against Clinton for doing such I could be branded as homophobic, sexist and a racist person that denigrates women.  I ask how many other shares my apprehension.

But if this is a valid hesitancy, have we not surrendered our freedom?

A major reason why I believe Trump’s odds are considerably higher than the media suggests is that society is tired of politicians from both parties.  This is not a radical thought.  I live in the district where Dave Brat beat the House Majority leader in a republican primary that was expected not to be a contest.

It was the largest upset since 1896.  In many ways this June 2014 primary was the birth of the antiestablishment movement that has since elevated the likes of Trump and Sanders.

Cantor lost by a wide margin and I did not vote for Brat but instead voted against Eric Cantor as I believe Cantor represented everything wrong with Washington.  Will there be even a larger upset on November 8?

I place the odds at 45%.  Wow!!  Society is angry.  Only 9% of the electorate views Congress favorably.  10% view the press favorably and only 11% think Clinton is honest and trustworthy.  Seventy five percent believes the country is headed in the wrong direction.

To put this data into perspective 14% believe Big Foot is real.

Enough of waxing politically, what will happen today?

Last night the foreign markets were down.  London was down 0.94%, Paris down 1.47%, and Frankfurt down 1.33%.  China was up 0.09%, Japan down 0.39%and Hang Sang down 1.61%.

The Dow should open moderately lower following an unexpected drop in Chinese exports revived concerns about the global economy as the Fed considers rising interest rates. The 10-year is up 5/32 to yield 1.76%.


The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.